Stop Foreclosure

7 Ways to Stop a Foreclosure

You've missed a mortgage payment. Now comes the second month and you get a bill for two payments. Part way through the month you have the money for one payment, but the bill says you owe two so you do nothing. Think carefully before you fall into this trap. There will come a time when the bank will demand you pay all you owe them and they will take no less. Until the bank refuses to take your money consider making what payments you can.

This will show the bank you intend to pay them and show them efforts are being made. More importantly if over four months you made only two payments you may be only 60 days behind, while that may not make the bank happy, it may not meet their criteria to start a foreclosure.

Keeping in touch with the bank and making some payments can delay the start of foreclosure many months. Hopefully during that extra time you can solve the underlying problems and avoid ever having a foreclosure.

If you have NOT missed a payment yet, but know you are going to, the first step you must take is to contact your lender and let them know your situation. If you've lost your job have or some other type of hardship going on let them know. They can give you time to help get your life back together, but you must call them as soon as you know you're going to miss a payment. The longer you wait, or if you wait until you actually miss your payment, it makes it more difficult to ultimately get the problem solved.

Ask for forbearance. This allows you to delay payments for a short period of time, with the understanding that another option will be used afterwards to bring the account current. For example; if you know you'll have the funds to bring your account current by a specific date because of a guaranteed sum of money you're receiving.

Ask for a repayment plan. This is where the lender agrees to add, a certain amount of the first missed payment onto each of the next subsequent two payments. These plans provide some breathing room for you, if you only have short-term financial problems, such as a sudden expensive repair, or a medical expense that makes it too difficult to pay your mortgage for one month.

If you have already missed two or three payments and owe a couple thousand dollars in lender legal fees, the lender of your mortgage may still try to arrange a repayment schedule. But you will likely have to pay a third to a half of the delinquent amount upfront, and then pay off a portion of the remaining balance each month for a year or more. Also, never ignore the lender's letters or phone calls. Ignoring the problem won't make it go away -- and if you're going into a foreclosure process, there are other fees and costs involved and ignoring them only makes these worse.

You may also be eligible for a loan modification plan, designed for people that can't afford repayment plans. In a modification, the lender actually adjusts the terms of the loan to make it affordable. It may lengthen your amortization schedule or lower the interest rate to cut the monthly payments, or roll the past due amount into the loan and re-amortize the new balance, so you can pay the additional debt back over time.

Some companies may be willing to offer you a "short refinance," too. With these, the lender agrees to forgive some of your debt and refinance the rest into a new loan. This way, the lender still gets more money than they would by foreclosing on you.

If none of these 6 methods work, and you can afford your normal monthly mortgage payment, but can't afford to make up the delinquent amount and legal fees because your lender offered a really harsh repayment plan, you may want to consider filing Chapter 13 bankruptcy. Doing so temporarily halts the foreclosure process and can force the mortgage lender to accept a more friendly repayment plan. This is a last resort, and will still negatively affect your credit.

Proper filing of a Chapter 13 Bankruptcy always stops a foreclosure in its tracks. When a Chapter 13 plan, to pay back creditors, meets approval from the court and the debtor pays all the payments under the plan the foreclosure never starts up again. Failure to make payments gives the creditor the option of restarting the foreclosure when it left off before the Chapter 13.

Points to remember:

You must file on time; failure to meet a filing deadline could result in losing your home.

You must make all payments required under the plan; otherwise your creditor can start the foreclosure back up.

If none of the above methods work, there is one other option.

As you may know, a foreclosure is devastating to your credit rating and can affect it for 7 to 10 years. What's more, buying or even renting another home in that time period may be impossible for you. But, there is one more option where I may be able to help you personally.

Even if you can no longer afford your home, you can still protect your equity and keep a good credit rating.

Here's how:

Up until a few days before the bank forecloses on your property, you have the opportunity to stop that process by having someone purchase the property.

I may be willing to do this for you. I arrange creative, legal and ethical ways to buy property or assume mortgages from people who need help. I may even be able to let you stay in the house, depending on your situation.

The bottom line, though, is this; if your situation allows it, I can stop your foreclosure, and often put money BACK in your pocket so you can start over in a more affordable home.